TSU says chipmaker sold equipment to China

SECURITY RISK The party says illegal sales by UMC across the Strait should convince the government to delay the easing of rules limiting investment in China

By Lin Mei-chun / STAFF REPORTER

TSU lawmaker Lo Chih-ming, standing, explains at a press conference yesterday his accusation that United Microelectronics Corp sold equipment to China before the lifting of a government ban on such sales.

PHOTO: CHIANG YING-YING, TAIPEI TIMES

TSU lawmakers yesterday claimed that a leading chipmaker -- which is requesting the government lift its ban on the building of eight-inch wafer foundries in China -- has already jumped the gun by selling its equipment there at a time when the transaction is still illegal.

United Microelectronics Corp (UMC, 聯電), the company that has stirred controversy over its demand for the lifting of the ban, has allegedly sold its equipment to Beiling Semiconductor Industry (貝岭半導體工業) in Shanghai via Happy Wealth Holding, a paper company in the Cayman Islands, according to the TSU lawmakers.

The allegation was another move by the TSU to pressure the government into postponing its decision to fully open investment channels to Beijing. The party says that the relaxation of investment curbs would sabotage Taiwan's national security and harm the industry's prospects if it is done without effective management measures.

The lawmakers asked Vice Premier Lin Hsin-yi (林信義), the former minister of economic affairs, to take political responsibility for the negligence that allowed the breach of regulations.

TSU lawmaker Lo Chih-ming (羅志明) said that UMC had sold some of its equipment for the manufacturing of eight-inch chips to Happy Wealth Holding on Jan. 18 for NT$8 billion (US$255 million), and the same package was immediately re-sold in Shanghai for NT$15 billion.

He said his party suspects that the NT$7 billion in profit was a device whereby UMC paid off officials who it lobbied to get approval to invest in China.

He then challenged the government's management measures, saying that UMC has put the private sector's interests above national interests. He said the company's engineers are transferring techniques for making eight-inch wafers to Beiling, which is currently only capable of manufacturing four-inch wafers.

"Where is the government when a dozen of UMC's top engineers are already stationed in Shanghai?" Lo asked.

Citing a report from ChinaNex news agency as an example, the lawmaker said the report indicates that UMC will invest NT$170 billion in a factory in Suzhou by next year.

"How can the government be managing the eight-inch wafer investment ban when it claimed that [China-bound] investments will not exceed NT$200 billion [when one company alone will invest NT$170 billion]?" he asked.

The government will decide by the end of this month whether to allow a request from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and UMC -- the world's largest and second-largest computer chipmakers -- to set up foundries in China.

UMC officials came out in defense of the company, saying that the Jan. 18 business deal was legal.

The officials acknowledged the transaction but said the two end companies are completely unrelated, and they could not tell Happy Wealth Holding who to sell its equipment to.

Premier Yu Shyi-kun yesterday dismissed reports that the Cabinet has promised the TSU that the government will postpone the relaxation of investment curbs until next January.

Yu said at the legislative session that he had never offered the postponement to the TSU, and that the Cabinet is still evaluating the matter and won't make its final decision until the end of this month.

According to Chinese-language media reports yesterday, the Cabinet has made a goodwill gesture to the TSU by promising that the relaxation won't be made until next January, following increasing pressure from the TSU.